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IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
SARAH JOHNSON, as personal representative of THE ESTATE OF PHILIP CUNNINGHAM, No. 74848-3-1 Appellant, DIVISION ONE v.
CITY OF TACOMA, a municipality, UNPUBLISHED OPINION
Respondent. FILED: June 6. 2016
Spearman, J. — Sarah Johnson, as personal representative of the estate
of Philip Cunningham, appeals the trial court's order granting summary judgment
to the City of Tacoma. She argues that genuine issues of fact exist as to whether
the City misrepresented its retirement plan to Cunningham and whether the City
breached its retirement contract with Cunningham. Finding no error, we affirm.
FACTS
Cunningham worked for the City of Tacoma for nearly 30 years. He
contributed about $170,000 to the City's mandatory retirement plan, the Tacoma
Employees Retirement System (TERS). TERS is a defined benefit plan funded
by employer and employee contributions. After employment for a given number
of years, TERS guarantees the retiree a fixed benefit described as an "annuity"
or "pension." Clerk's Papers (CP) at 10, 52, 55, 62. No. 74848-3-1/2
Cunningham received a TERS account statement at the end of each year.
The statements showed the amount of his contributions to the retirement plan
and informed Cunningham that he could withdraw his contributions if he left
employment with the City. The statements also showed that Cunningham had not
designated a beneficiary for his TERS account. The December 2011 statement
informed Cunningham that, in the absence of a designated beneficiary, his estate
was the default beneficiary.
In the fall of 2013, Cunningham requested information about retirement.
He submitted a "Retirement Estimate Request" form to learn the amount of
benefits he could receive under the City's different retirement plan options. The
City prepared a retirement estimate with information about five plan options.
The first listed option is the "Unmodified Benefit." The estimate states:
"The Unmodified Benefit will pay you approximately $2,834.45 per month for your
life. No benefit will be paid to a beneficiary after your death." CP at 38. The
estimate then describes four other options that offered reduced monthly
payments to Cunningham but provided for a benefit to a beneficiary after
Cunningham's death. Under options A and B, the beneficiary receives the
balance, if any, of Cunningham's contributions to the TERS plan. Under options
C5 and C10, the beneficiary receives a defined benefit for a fixed period of time.
The cover letter that accompanied the estimate advised Cunningham to review
the options carefully as the selection is irrevocable. The letter also referred
Cunningham to the TERS website for further information and recommended that
he schedule a retirement counseling session with a benefits specialist. No. 74848-3-1/3
Cunningham scheduled a retirement counseling session with Marni
Moore, a City benefits specialist. Cunningham talked with employee Cecelia
Moullet in the reception area while he was waiting for Moore. According to the
City, Cunningham told Moullet that he had selected the unmodified option.
Moullet asked him if he was sure that was the option he wanted. She explained
that it takes about 10 to 12 years of retirement to exhaust a retiree's contributions
to TERS and that if Cunningham died within that timeframe the balance of his
contributions would stay in the TERS plan. Cunningham allegedly stated that he
was sure of his choice and he did not want to leave any of his retirement
contributions to anyone. Cunningham then attended his meeting with Moore.
During a retirement counseling session, Moore's role is to explain the options to the retiree. Moore is not a financial adviser and she does nottry to choose a retirement plan for the retiree. Moore uses a "counseling checklist" to address several topics, including the retirement estimate and the retirement plan options. On the checklist from Cunningham's session, the unmodified plan option is circled. Each topic is initialed by Moore and the form is signed and dated by
Cunningham.
Moore filled out Cunningham's retirement application during the
counseling session. On the application, the unmodified plan option is selected. Moore stated that Cunningham had already decided to select the unmodified option when he arrived for the counseling session. About 20 percent of City employees select that option and Moore did not find the choice surprising. Moore stated that she explained the option and specifically told Cunningham that under No. 74848-3-1/4
the unmodified option no one would receive the balance of his TERS
contributions if he died during retirement. Moore asked Cunningham if he was
sure he did not have someone he wanted to leave his retirement account to.
Cunningham allegedly replied that he did not want his family "'to get a dime.'" CP
at 66.
The retirement application instructs applicants to designate at least one
primary beneficiary and states that "[y]our primary beneficiary(ies) will receive
any monies in your account at the time of your death." CP at 47. On
Cunningham's application, the word "estate" is handwritten in the beneficiary
designation space, jd Moore stated that she explained to Cunningham that a
pro-rata payment for the number of days Cunningham was alive in the month of
his death would be paid to his estate. The application is signed and dated by
Cunningham. The text in the signature block acknowledges that he "made this
decision after receiving the foregoing information including a printout of [his]
retirement options benefits estimate." CP at 48.
After Cunningham submitted his application, he received a "retirement
confirmation." CP at 52-55. The confirmation reiterates that a retiree's selection
of a plan option is irrevocable and refers the retiree to the TERS website for
further information. The confirmation also explains that pension payments are
distributed on the last business day of each month.
Cunningham retired on January 1, 2013. He died by suicide on February
10, 2013. The City informed Cunningham's estate that, under the retirement
option he had selected, the estate was entitled only to the retirement benefit No. 74848-3-1/5
accrued during the month of Cunningham's death. The City calculated the pro
rata benefit for the number of days Cunningham was alive in February 2013 and
distributed that amount to Cunningham's bank account.
Cunningham's will, which he executed before beginning employment with
the City of Tacoma, named his daughter Sarah Johnson as the executor and sole
beneficiary of his estate. Cunningham had told Johnson that she would inherit
everything when he died. However, Cunningham never discussed specific
investments with Johnson or mentioned his retirement plan.
Johnson brought this action against the City as personal representative of Cunningham's estate. She asserted that Cunningham's estate was entitled to the residue of the contributions Cunningham had paid into the retirement system.
Johnson argued that Cunningham's will showed that he had a long-standing plan to leave everything to his estate, the City had informed Cunningham that his estate was his default beneficiary, and Johnson confirmed his intent to leave his
retirement contributions to his estate by designating his estate as beneficiary on
his retirement application. Johnson asserted claims for negligent or intentional misrepresentation, breach of contract, and unjust enrichment. She also sought a declaration that the retirement benefits Cunningham was entitled to during his life
were properly payable to his estate.
The City moved for summary judgment. It attached, among other documents, Moore's affidavit testifying to her meeting with Cunningham and statements he made during that meeting. Johnson moved to strike the affidavit as barred by the Deadman's Statute. No. 74848-3-1/6
The trial court granted Johnson's motion to strike and granted the City's
motion for summary judgment. Johnson appeals. The City cross-appeals the trial
court's application of the Deadman's Statute to bar Moore's affidavit.
DISCUSSION
The City's cross-appeal is only properly before this court in the event that
we remand. RAP 2.4. Accordingly, we first consider Johnson's argument that the
trial court erred in dismissing her claims on summary judgment. We consider the
evidence before the trial court without reference to the excluded affidavit.
In reviewing a grant of summary judgment, any matters argued below but
not raised on appeal are deemed abandoned. GMAC v. Everett Chevrolet, Inc.,
179 Wn. App. 126, 134, 317 P.3d 1074 review denied. 181 Wn.2d 1008,335
P.3d 941 (2014) (citing Coqqle v. Snow, 56 Wn. App. 499, 512, 784 P.2d 554
(1990)). Because Johnson does not discuss her claim for declaratory judgment
on appeal, it is abandoned.
We review the trial court's summary dismissal of Johnson's other claims
de novo. Podbielancik v. LPP Mortq.. Ltd., 191 Wn. App. 662, 666, 362 P.3d
1287 (2015) (citing Camicia v. Howard S. Wright Constr. Co.. 179 Wn.2d 684,
693, 317 P.3d 987 (2014). Summary judgment is appropriate if there is no
genuine issue as to any material fact and the moving party is entitled to judgment
as a matter of law. CR 56(c). To survive a motion for summary judgment, the
nonmoving party "must set forth specific facts that sufficiently rebut the moving
party's contentions and disclose that a genuine issue as to a material fact exists."
Seven Gables Corp. v. MGM/UA Entm't Co.. 106 Wn.2d 1, 13, 721 P.2d 1 No. 74848-3-1/7
(1986). We view all evidence in the light most favorable to the nonmoving party.
Columbia Cmtv. Bank v. Newman Park. LLC. 177 Wn.2d 566, 573, 304 P.3d 472
(2013).
Johnson's claims concern Cunningham's contributions to the City's
retirement system. TERS is a defined benefit retirement plan. Unlike a defined
contribution plan, a defined benefit plan guarantees the participant a fixed
periodic payment for life. Washington Federation of State Employees v. State.
107 Wn. App. 241, 245 n.5, 26 P.3d 1003 (2001) (quoting Hughes Aircraft Co. v.
Jacobson. 525 U.S. 432, 439, 119 S.Ct. 755, 142 L. Ed. 2d 881 (1999)). A
defined benefit plan is a "general pool of assets," not a collection of individual
accounts. Hughes Aircraft Co., 525 U.S. at 439 (citing Commissioner v. Kevstone
Consol. Industries. Inc.. 525 U.S. 152, 154, 113 S.Ct. 2006, 124 L. Ed. 2d 71
(1993)). The employer bears the risk of investment and guarantees the
distribution of the fixed benefit even if the value of the plan's investments decline.
Id. at 440. Employees who participate in a defined-benefit plan do not share in
any decrease or surplus in the value of plan assets, ]d_,
Johnson first argues that the trial court erred in dismissing her claims for
negligent or intentional misrepresentation. She argues that the City negligently or
intentionally conveyed to Cunningham the message that the residue of his
retirement contributions would pass to his estate upon his death.
To establish negligent misrepresentation, a plaintiff must prove that the
defendant supplied false information and the plaintiff reasonably relied on that
false information. Ross v. Kirner. 162 Wn.2d 493, 499, 172 P.3d 701 (2007) No. 74848-3-1/8
(citing Lawyers Title Ins. Corp. v. Baik. 147 Wn.2d 536, 545, 55 P.3d 619 (2002).
Intentional misrepresentation requires proof that the defendant knowingly
misrepresented a material fact and the plaintiff reasonably relied on the
misrepresentation. West Coast. Inc. v. Snohomish Cntv.. 112 Wn. App. 200, 206,
48 P.3d 997 (2002).
Johnson asserts that the City misrepresented the benefit due to
Cunningham's estate through the 2011 TERS account statement, which informed
Cunningham that in the absence of a specifically designated beneficiary, his
estate was the default beneficiary of his retirement account. The statement,
which is one double-sided page, summarizes Cunningham's employment details,
outlines the eligibility requirements to receive a pension, and explains that an employee may withdraw TERS contributions upon leaving employment with the City. The statement does not discuss retirement options, guarantee a retirement benefit, or discuss the status of an employee's contributions after retirement. The
statement refers the employee to the TERS plan website and the TERS office to
receive further information.
The statement does not include all the information necessary for an
employee to fully understand the TERS plan orthe status of contributions to that plan before and after the employee retires. But the statement contains no misrepresentation. We conclude that the 2011 TERS account statement does not raise a question of material fact as to whether the City misrepresented the benefit that Cunningham's estate would receive.
8 No. 74848-3-1/9
Johnson also relies on Cunningham's application for retirement, on which
the word "estate" is handwritten in the space to designate a beneficiary. Johnson
asserts that the City misrepresented the effect of the beneficiary designation and
that Cunningham may have been under the impression that his estate would
receive the balance of his retirement contributions.
The retirement application instructs the applicant to designate at least one
beneficiary and states that the beneficiary will receive "any monies" in the
retiree's account. CP at 47. The application does not explain how the account
balance is determined or guarantee that there will be "any monies" in the
account. ]d_, The application also contains check boxes to select one of several
retirement plan options. The form does not explain these options, but
incorporates by reference the benefits estimate. The estimate details the monthly
benefit payable to the retiree under each option and the after-death benefit, if
any, to the retiree's beneficiary. The estimate states that under the unmodified
option "no benefit will be paid to a beneficiary" after the retiree's death. Under
options A and B, on the other hand, a beneficiary receives the balance, ifany, of
a retiree's contributions to his TERS account.
Like the 2011 TERS account statement, the application for retirement
does not contain a full explanation of the TERS plan, the retirement options, or
what happens to an employee's contributions to the TERS plan after the
employee's death. The requirement to designate a beneficiary, in conjunction
with the selection of the unmodified benefit, may cause confusion. But the
referenced benefits estimate clearly states that, in contrast to other plan options, No. 74848-3-1/10
under the unmodified benefit a beneficiary does not receive the residue of an
employee's contributions to the TERS plan. The application and estimate do not
falsely represent that Cunningham's estate would receive the balance of his
retirement contributions.
We conclude that the 2011 TERS account statement and the retirement
application do not raise a question of material fact as to whether the City
provided false information concerning the distribution of Cunningham's retirement
contributions. The trial court properly dismissed Johnson's claims for negligent
and intentional misrepresentation on summary judgment.
Johnson next argues that the trial court erred in dismissing her breach of
contract claim. A mandatory retirement or pension plan is a contract interpreted
according to the ordinary rules of contract construction. Jacobv v. Grays Harbor
Chair & Mfg.. 77 Wn.2d 911,916, 468 P.2d 666 (1970)). A contract term is
ambiguous when it is susceptible to more than one reasonable interpretation.
American Nat. Fire Ins. Co. v. B & L Trucking and Const. Co.. Inc.. 134Wn.2d
413, 428, 951 P.2d 250 (1998) (citing Morgan v. Prudential Ins. Co.. 86 Wn.2d
432, 435, 545 P.2d 1193 (1976)). The meaning of an ambiguous term may be
ascertained from the contract as a whole as well as extrinsic evidence, jd.
Johnson argues that the retirement application is ambiguous on its face
because the selection of the unmodified option is inconsistent with the
designation of "estate" as Cunningham's beneficiary. Appellant's Brief at 11;
Appellant's Reply Briefat 8-9. Johnson argues that this ambiguity must be
10 No. 74848-3-1/11
construed against the City and the residue of Cunningham's contributions to his
TERS account should therefore be awarded to the estate.
The beneficiary designation on the application states that the beneficiary
will receive "any monies in your account" at death. CP at 47. The application
does not explain what account it is referring to or how it determines if"any
monies" remain in that account, jd. The City argues that a retiree who begins
drawing benefits under the unmodified option no longer has an individual TERS
account but has only a guaranteed monthly pension for life. The only "monies" in
the retiree's "account" are thus those pension benefits accrued but not distributed
during the last month of the retiree's life. Id,
Johnson appears to argue that, by its plain language, the application
guarantees that the beneficiary will receive the residue of the retiree's TERS
contributions. But this interpretation is inconsistent with the majority of retirement
options. Options A and B guarantee a beneficiary the residue, if any, of the
retiree's TERS contributions, but the other options contain no such provision.
And the unmodified option expressly provides for no benefit to a beneficiary after
the retiree's death.
Reading the application together with the explanation of plan options in
the benefits estimate, we conclude that the phrase "any monies in your account"
is not reasonably susceptible to the interpretation that Johnson proposes. The
application and referenced estimate clearly differentiate between those
retirement options that distribute the residue of a retiree's TERS contributions
11 No. 74848-3-1/12
and those that do not. The "monies" in the retiree's "account" are logically
determined by reference to the terms of the selected retirement option.
We conclude that the language of the pension contract is not ambiguous.
The City was contractually obligated to make pension payments to Cunningham
during his life and to pay his estate "any monies" due under the terms of his
selected retirement option. Johnson produced no evidence to suggest that the
City breached this contract. The trial court properly dismissed Johnson's breach
of contract claim.
Johnson next asserts a claim for unjust enrichment in the alternative that
we determine that Cunningham's retirement plan was not contractual. She
argues that "the ambiguities in the contractual documents" could lead us to
conclude that there was no final agreement between the City and Cunningham.
Appellant's Reply Brief at 10. But there is no ambiguity in the pension documents
that prevented contract formation. Because the pension is governed by contract,
we do not consider Johnson's claim in equity. Young v. Young. 164 Wn.2d 477,
484, 191 P.3d 1258 (2008) (citing Bailie Commc'ns. Ltd. v. Trend Bus. Svs.. Inc..
61 Wn. App. 151, 160, 810 P.2d 12 (1991)) (stating that unjust enrichment may
be asserted where there is no contractual relationship).
Finally, Johnson asserts that the beneficiary designation in Cunningham's
retirement application is a contract provision that takes effect at death and is thus
testamentary in nature. Johnson argues that the application does not meet the
requirements for a will and cannot control over the will Cunningham properly
executed in 1983. Johnson asserts that Cunningham's retirement contributions
12 No. 74848-3-1/13
should have been distributed with his other probate assets. This argument is
without merit.
A pension plan is a nonprobate asset. RCW 11.02.005(10). A nonprobate
asset may be controlled through a will, but only if the asset is specifically referred
to in the owner's will. RCW 11.11.020. Johnson makes no argument that
Cunningham's will specifically referred to his TERS account or to his nonprobate
assets generally.
In addition, under the terms of his selected retirement option, once
Cunningham retired, he only had a claim to a monthly defined benefit during his
lifetime, not to the TERS contributions he made during employment. After
retirement, Cunningham no longer had an ownership interest in his retirement
contributions and thus had no interest to devise through his will.
We conclude that the trial court properly granted the City's motion for
summary judgment. We accordingly do not reach the City's cross-appeal
concerning the application of the Deadman's Statute to bar the affidavit of the
City's benefits specialist.
Affirm.
•dy (+^t>~_ ^J. WE CONCUR: —4* f 't-
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